Austerity measures are likely in store for the county government as the covid-19 pandemic wreaks havoc on the economy.
The economic downturn is projected to take up to a $3.7 million bite out of the county’s budget, County Manager Ben Scott told the County Commission on Thursday.
“Best-case scenario in our mind is a $2 million reduction,” County Manager Ben Scott told the County Commission on Thursday, delivering a report on the potential loss of tax revenue.
Spending cuts and a hiring freeze are among the options on the table, commissioners said.
On a national scale, unemployment is skyrocketing as vast swaths of the economy remain on freeze. Even in the states that have begun reopening, business has still slowed down because the general public is cautious about going outside.
The impact to the county’s budget will likely be wide-ranging, Scott said Thursday.
The county manager delivered a breakdown of how specific services might be affected.
The road improvement fund alone is expected to see up to a $107,000 loss in revenue, Scott said.
That money, which goes toward paving roads, comes from gas taxes. That’s the same revenue stream that accounts for the majority of the Public Works Department budget, Scott said.
“People haven’t really been traveling, so we are going to see a dip in gas taxes,” he said.
Two other major sources of cash, property tax and sales tax, will likely take a hit as well, Scott said.
Tourism development funds, which come from a tax on hotel rooms, could see a drop of up to $400,000 by the latest estimate, Scott said, but officials still don’t have a complete picture of how extensive the damage there may be.
“We’re going to continue to get information on that,” he said.
Scott gave several other examples of areas in the budget that will need to be reworked to account for the loss in revenue.
The county’s general fund budget for the 2020 fiscal year is $30,978,174, to put Scott’s projections into context. In Scott’s best-case prediction, a $2 million drop would represent a roughly 6.5 percent decrease.
During the meeting on Thursday, Commissioner Ron Williams said he’s been following the economic situation for states that have eased or lifted shut-down measures.
“They might be open, but people are not showing up,” Williams said. “It’s like me, I’m not going to die stupid.”
Williams said he doesn’t expect a speedy recovery.
“I believe it’s going to be worse than what we think on the reduction of revenue,” he said.
Austerity may be inevitable, Williams said, but he said it should be distributed evenly.
“Now if we have to take the knife out and cut, we cut,” he said. “But we cut across the board.”
Despite the grim outlook, Williams said he “can’t see even entertaining the idea” of hiking property taxes.
Commission Chairman Toby Witt said that with families struggling to stay afloat, it would actually be the “perfect time” to cut property taxes.
“I get it, but this needs to be the year of the taxpayer and not the year of the county,” Witt said.
Witt called for the county to maintain the status quo with a “real lean budget.”
Commissioner Tim Murphy recommended a hiring freeze.
“Who knows what the future holds,” Murphy said.
Scott said he’s considered a scenario in which the county has a ”semi-freeze” on hiring employees, which would make an exception for vital positions that have been vacated.
Commissioner Bucky Nash said his main concern is that a second wave of covid-19 cases will continue to damage the economy.
“We’re not really looking at a one-year budget, we’re looking at a two-year budget in my opinion,” Nash said.